Item 2.  Acquisition or Disposition of Assets

                             SPRING LAKE APARTMENTS
                                 Morrow, Georgia

         On  August  12,  1998,  Cornerstone  Realty  Income  Trust,  Inc.  (the
"Company")  purchased the Spring Lake Apartments,  a 188-unit  apartment complex
located at 7000 Southlake  Parkway,  Morrow  (outside of Atlanta),  Georgia (the
"Property").

         The Company  purchased  the Property  from Morrow  Apartments,  Inc., a
Georgia  corporation which is not affiliated with the Company or its affiliates.
The purchase  price was  $9,000,000.  The Company  borrowed $8 million under its
unsecured  line of credit and paid the balance  from cash on hand.  Title to the
Property was conveyed to the Company by limited warranty deed.

         LOCATION.  The Property is in Morrow, Clayton County, south of Atlanta,
Georgia. The following information is based in part upon information provided by
the greater Atlanta Chamber of Commerce.

         The greater  Atlanta  metropolitan  area has a population  in excess of
three  million  persons.  The  economy of the area is diverse,  and  includes as
significant  sectors  services,  manufacturing,   transportation,  distribution,
retailing,  wholesaling,  finance, insurance, real estate, government, research,
education  and  medicine.  More than 80% of the Fortune 500  companies  and over
1,800 local  manufacturing  firms have  operations  in the area.  Atlanta is the
national headquarters of Coca-Cola, BellSouth, Turner Broadcasting System, Delta
Air Lines,  Georgia-Pacific,  Home  Depot,  Cox  Enterprises  and United  Parcel
Service.  In addition,  IBM and AT&T have consolidated their southern operations
in Atlanta. The city is also headquarters for the Sixth District Federal Reserve
Bank.

         The Company  believes  that the  diversity of the  metropolitan  area's
economy  makes  the area less  susceptible  to  cyclical  business  swings.  The
metropolitan  area's current  unemployment  rate is  approximately  3%, which is
lower than the overall Georgia  unemployment rate of approximately  3.8% and the
national  unemployment average of 4.7%. For three consecutive years, Atlanta has
led the nation in new job growth.

         The  convention  and  visitor  trade is also one of  Atlanta's  primary
economic  advantages and has an important  impact on the overall  economy of the
city.  Atlanta's  hospitality  industry employs over 80,000 persons.  Currently,
Atlanta ranks behind only New York, Chicago and Dallas in convention attendance.

<PAGE>



Atlanta's hosting of the 1996 Centennial  Olympic Games furthered its visibility
as an important city internationally.

         Atlanta sits at the junction of five major  Interstate  Highways (I-20,
I-75,  I-85,  I-285 and I-675).  There are several airports in the area, but the
principal airport is  HartsfieldAtlanta  International  Airport,  which had over
60,000 flights and over 4.5 million passengers in 1994. Atlanta also has a rapid
rail transit system (known as the Metropolitan  Atlanta Rapid Transit Authority,
or "MARTA").

         Institutions  of higher  education  in the  Atlanta  metropolitan  area
include  Kennesaw  State  University,  Emory  University,  Georgia  Institute of
Technology, and Georgia State University. The University of Georgia in Athens is
within approximately 50 miles.

         Atlanta  has at least  25  hospitals  with  100 beds or more.  The area
offers a full array of performing arts,  including  symphony,  ballet and opera,
and has major league baseball, basketball and football franchises.

         The  Property  is  located  on  the  east  side  of  Southlake  Parkway
approximately  one-quarter  mile east of Jonesboro  Road (Highway  54).  Clayton
County,  in which the Property is located,  is  approximately  15 miles south of
Atlanta's central business district. Hartsfield-Atlanta International Airport is
located in Clayton County and is one of the region's most  significant  economic
assets and employers.

         The  neighborhood  in which the  Property is located  consists of other
multi-family housing,  single-family housing, commercial and retail development.
The Property is located near businesses, major shopping, entertainment,  schools
and  churches.  The property is  approximately  one mile from  Interstate 75 and
approximately four miles south of Interstate 285, which encircles Atlanta.

         Description of the Property.  The Property consists of 188 garden-style
apartment  units in 23  two-story  buildings  on  approximately  28  acres.  The
Property includes a lake occupying  approximately  eight acres. The Property was
built in 1986.

         The Company  believes that the Property has been well maintained and is
in good condition.  However, the Company has budgeted approximately $506,000 for
additional  renovations  to  the  Property,   including  clubhouse  renovations,
breezeway  repairs,  wood  replacement,  re-flashing and re-caulking of windows,
additional landscaping, and interior upgrades.

         The  Property  offers  nine unit  types.  The unit mix and rents  being
charged new tenants as of August 1998 are as follows:

                                       2

<PAGE>



<TABLE>
<CAPTION>
                                                                      APPROXIMATE
                                                                        INTERIOR                     MONTHLY
     QUANTITY                         TYPE                           SQUARE FOOTAGE                   RENTAL
     --------                         ----                           --------------                   ------
<S>                            <C>                              <C>                             <C>
        16                         One bedroom, one                       696                          $560
                                   bathroom
                                   w/screened porch
        16                         One bedroom, one                       696                           570
                                   bathroom
                                   w/screened porch, FP
        8                          One bedroom, one                       771                           580
                                   bathroom
                                   w/screened porch, FP
        16                         One bedroom, one                       842                           590
                                   bathroom
                                   w/sunroom
        16                         One bedroom, one                       842                           600
                                   bathroom
                                   w/sunroom, FP
        48                         Two bedrooms, two                      1,158                         685
                                   bathrooms w/sunroom
        36                         Two bedrooms, two                      1,158                         700
                                   bathrooms w/sunroom,
                                   FP
        8                          Two bedrooms, two                      1,158                         700
                                   bathrooms w/sunroom
                                   (lake view)
        24                         Two bedrooms, two                      1,158                         715
                                   bathrooms w/sunroom,
                                   FP (lake view)

</TABLE>

         The apartments provide a combined total of approximately 190,000 square
feet of net rentable area.

         Leases at the  Property  are  generally  for terms of one year or less.
Average  rental rates for the past five years have  generally  increased.  As an
example, a two-bedroom,  two-bathroom  apartment unit (1,158 square feet) rented
for $537 in 1993, $547 in 1994, $560 in 1995, $583 in 1996 and $623 in 1997. The
average  effective annual rental per square foot at the Property for 1993, 1994,
1995, 1996 and 1997 was $6.06, $6.17, $6.32, $6.58 and $7.03, respectively.

                                       3

<PAGE>



         The buildings are wood-frame  construction on concrete  slabs,  and the
exteriors  are covered  with  horizontal  vinyl  siding.  Roofs are pitched with
composition  shingles  on  plywood  decking  and  there are  metal  gutters  and
downspouts throughout the Property.  According to the seller, roofs on 13 of the
buildings were replaced in the past three years.

         Each apartment unit has wall-to-wall  carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up and an individually  controlled  heating and air conditioning  unit. The
owner of the property supplies cold water, sewer service and trash removal. Each
resident is responsible for his or her own electricity usage, which includes air
conditioning  and  lights,  and each  resident  also pays for gas  usage,  which
provides for heat, hot water and cooking.

         Each unit includes washer/dryer  connections for full-sized appliances,
horizontal and vertical blinds and a screened porch or sunroom.  Some units have
a wood-burning  fireplace.  Each kitchen is equipped with a refrigerator/freezer
with icemaker, gas range and oven, dishwasher and garbage disposal.

         The Property has an outdoor  swimming  pool, a lighted  tennis court, a
lake of  approximately  eight  acres in size  with a walking  trail  and  picnic
pavilion,  two  basketball  courts,  a sand volley ball court,  a playground,  a
laundry  facility  and  three  car wash  areas.  Eight of the 23  buildings  are
situated  around  the lake.  The  Property  also  includes  a  clubhouse  with a
fireplace, kitchen and leasing office. There is ample paved parking for tenants.

         There are at least eight apartment  properties in the area that compete
with the Property. All offer similar amenities and have rents that generally are
comparable to those of the Property.  Based on a recent  telephone  survey,  the
Company  estimates  that occupancy in nearby  competing  properties now averages
approximately 95%.

         According to information provided by the seller,  physical occupancy at
the Property  averaged  approximately 93% in 1993, 95% in 1994, 96% in 1995, 97%
in 1996, and 94% in 1997. On August 6, 1998, the Property was 97% occupied.

         The tenants at the Property are a mix of  white-collar  and blue-collar
workers, students and retired persons.

         For 1997,  Morrow County  specified an assessed  value for the Property
equal to $7,896,000. The taxable value is equal to 40% of the assessed value, or
$3,158,400.  The tax rate was  $2.798,  and the total  real  estate  taxes  were
calculated as $88,372.

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<PAGE>



         The basis of the depreciable  residential  real property portion of the
Property (currently estimated at about $8,113,883) will be depreciated over 27.5
years on a straight-line  basis. The basis of the personal property portion will
be depreciated in accordance with the modified  accelerated cost recovery system
of the Code.  Amounts to be spent by the  Property on repairs  and  improvements
will be treated for tax purposes as permitted by the Code based on the nature of
the expenditures.

         The  Company  believes  that the  Property  is and will  continue to be
adequately covered by property and liability insurance.

         Material  Factors  Considered in Assessing  the  Property.  The factors
considered  by the  Company  to be  relevant  in  evaluating  the  Property  for
acquisition by the Company included the following.

         1. The Company believes that the greater Atlanta,  Georgia metropolitan
area will  continue to enjoy  steady  population  increase  and steady  economic
development and that such increase and development will support stable occupancy
rates and  reasonable  increases in rents at the Property.  In  particular,  the
Company  believes that the Property is located in a particularly  desirable part
of the Atlanta metropolitan area.

         2.  Based  upon an  engineering  report  and its own  inspections,  the
Company  believes  that the  Property  is in very good  condition.  The  Company
believes that the Property has an amenity package that may give it a competitive
advantage, including the presence of an eight-acre lake that affords a lake view
for many apartment units.

         3. The Property is located  near major  employment  centers,  including
particularly Hartsfield-Atlanta International Airport.

         The Company is not aware of any material  adverse  factors  relating to
the  Property  not set forth in this  report  that  would  cause  the  financial
information  contained in this report not to be indicative  of future  operating
results.

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